Shri Ashok Vani Vs ITO (ITAT Indore)
There is no dispute with regard to the fact that the assessee is a kirana merchant and running a kirana shop at a small place, where he is carrying out the business of kirana in retail. As per the provisions of Section 44AA read with Section 44AF of the Act, the assessee was not required to maintain any books of account. The assessee had retracted from the statement as made before the assessing authorities. After considering the facts, material placed before us and the background of the assessee, we find merit in the contention of the Ld. Counsel for the assessee that the AO ought to have considered the facts in right perspective. We, therefore, allow grounds and direct the AO to delete the additions which was solely made on the basis of the statement recorded during the course of survey.
FULL TEXT OF THE ITAT JUDGMENT
Appeal by the assessee is directed against the order of CIT(A), Ujjain, dated 6th February, 2017, pertaining to the assessment year 2005-06.
2. The assessee has raised the following grounds of appeal :-
- That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of 77,845/- made by the AO in the appellant’s income on allegation of unexplained cash, solely on the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering and appreciating the explanation with evidences offered by the appellant.
2. That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of 54,220/- made by the AO in the appellant’s income on allegation of unexplained investment in stock, solely on the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering and appreciating the explanation with evidences offered by the appellant.
3. That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.5066/- made by the AO in the appellant’s income by estimating the total sales of the appellant, for the year under consideration, at Rs. 10,11,317/- as against the same shown by the appellant at 9,10,000/-.
4. That, the learned CIT(A) grossly erred in confirming the addition of Rs.5,53,501/- made by the AO in the appellant’s income merely on the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering and appreciating the explanation with evidences offered by the appellant during the course of assessment proceedings.
5. That the learned CIT(A) grossly erred in confirming the additions of Rs.32,484/- and Rs.81,950/- made by the AO in the appellant’s income respectively on account of cash advances and kirana debtors merely on the basis of statement of the appellant recorded during the course of survey u/s. 133A of the Act, without considering and appreciating the explanation with evidences offered by the appellant during the course of assessment proceedings.
6. That, the learned CIT(A) grossly erred in confirming the addition to the extent of Rs. 3,348/- in the appellant’s income on allegation of undisclosed purchases of ‘Mahua’, merely on surmises, guess work and conjectures by adopting arbitrary rate of net profit @ 5%.
3. Briefly stated, the facts of the case are that the survey action was carried out at the business premises on 3rd March, 2005, when the assessee surrendered a sum of Rs. 8 lakhs on account of excess stock, loose papers etc. Subsequently, the assessee filed a return declaring income of Rs. 82,300/-. The case of the assessee was picked up forscrutiny assessment and the assessment u/s 143(3) was framed, thereby made addition of Rs. 9,68,285/- including the amount surrendered during the survey action. Against this, the assessee preferred an appeal before the Ld. CIT(A), who after considering the submissions partly allowed, thereby the Ld. CIT(A) deleted the addition of Rs. 96,251/-made on account estimation of gross profit, rest other additions were confirmed. Now the assessee is in appeal before this Tribunal.
4. Apropos ground nos. 1 to 6, the Ld. Counsel for the assessee reiterated the submissions made before the CIT(A). For the sake of clarity, the submissions made before the CIT(A) is reproduced as under :-
“The appellant is an individual, aged nearly 35 years, residing in a tribal village ‘Jobat’ Dist. Jhabua. The appellant started his earning career by becoming a collection agent of Sahara India limited in the year 1993-94. He carried on such activity up till F.Y. 1996 97. Thereafter he started the business of brokerage in kirana, cotton and grain at Jobat and surrounding places. In November 2001, he started a retail kirana shop at Jobat under the name and style of “M/s. Shriram Traders” by making small investment of approx. Rs.70,000/-. The appellant had accumulated capital of Rs.3,22,800/- up till 31-03-2003. The appellant had disclosed all such facts in his Return of Income filed for the first time in respect of A.Y. 2004-05 on 05-10-2005. Along with such Return of Income for A.Y. 2004-05, the appellant had also furnished his statement of affairs as of 31-03-2004 as also a statement showing accumulation of his capital up till 31-03-2003. A copy of acknowledgement of Return, Computation of Income, Statement of Affairs and Statement showing Accumulation of Capital, as filed by the appellant along with his Return for A.Y. 2004-05 are being submitted herewith as Annexure A-1.01 & A-1.02 [Paper Book Page No. 13 to 18]. The Return of Income filed by the appellant for A.Y. 2004-05 was duly accepted by the learned A.O.
A survey under section 133A of the Income-Tax Act, 1961 was carried on in the business premises of the appellant on 03-03-2005 by the Income-Tax Officer, Ward-2, Ratlam.
During the course of survey, certain books, documents and loose papers were found and the same were impounded by the survey party. Xerox copy of the inventory of books and other documents found during the course of survey is being submitted herewith. Besides, an inventory of stock and cash balance lying with the appellant were also prepared. Copy of list of stock and inventory of cash are being submitted herewith. Further, during the course of such survey, statement of the appellant were also got recorded by the Assessing Officer conducting the survey. A copy of the statement recorded is being submitted herewith. During the course of statement, the appellant made a declaration of additional income of Rs.8,00,000/-pertaining to the previous year under consideration.
The appellant being a retail trader, covered under section 44A of the Act, was not required to maintain any books of account. However, he was jotting down his transactions in unsystematic manner in various books and loose papers as impounded by the survey party.
Subsequently, the appellant furnished his Return of Total Income pertaining to the assessment year under consideration on 05-10-2005 vide Ack. No. 14311 declaring total income of Rs.82,300/-. A copy of the Computation of Total Income along with the copy of acknowledgement of Income-Tax Return are being submitted herewith. Along with such Return of Total Income, the appellant also furnished a statement containing ‘Notes on Survey’. A copy of such statement is being submitted herewith.
Subsequently, case of the appellant was selected under scrutiny and Notices under section 143(2) and 142(1) were issued and served upon the appellant from time to time. A copy of such Notices are being submitted herewith. The appellant made compliance of all such Notices from time to time by making the written submission and also by producing relevant evidences in support of his written submissions. A copy of such written submissions are being furnished herewith.
Finally, on 18-12-2007, the learned Assessing Officer framed the assessment under section 143(3) of the Income-Tax Act, 1961 by determining the Total Income at Rs.10,50,590/- as against the Returned Income of Rs.82,500/- thereby making addition of Rs.9,68,285/-on the following grounds:
